Union Split Imperils Agreement at Alitalia

September 16, 2008

By Caroline Brothers

Alitalia appeared to inch back from the verge of bankruptcy Monday as four of its nine unions agreed on the outline of a business plan for the carrier, but negotiations were to continue on the thornier challenge of a new labor contract.

Unions and a group of 16 investors known as CAI were engaged in emergency talks, brokered by the Italian government, to try to keep the airline flying and stop its administrator, Augusto Fantozzi, from starting to liquidate its assets.

“On the business plan front there is movement towards an agreement,” said a person with direct knowledge of the negotiations, who spoke on condition of anonymity because of the sensitive nature of the talks. But he added that differences between the unions’ leadership and their members and among the various labor groups meant that the accord was not yet solid.

“There seems to be a fracturing among the unions,” he said.

A copy of the agreement, obtained by the International Herald Tribune, showed that Alitalia’s four big unions – CGIL, CISL, UGL and UIL – had agreed in principle to a plan to cut more than 3,000 jobs, setting out ways to find new work for those who were laid off and laying out operating plans for the airline’s cargo and heavy maintenance divisions.

The investors group, Compagnia Aerea Italiana, intends to merge Alitalia’s viable assets with those of AirOne, an independent Italian carrier. Alitalia’s other businesses would be split off into a separate entity whose assets would be sold to help pay down about euro 1.2 billion, or $1.7 billion, in debt.

CAI agreed Sunday to take into the revived airline 12,500 Alitalia workers – 1,550 pilots, 3,300 flight attendants, and 7,650 other employees, managers and directors. That was 1,000 more than the number of employees that the investors had initially planned to bring into the airline that they hope to raise from the ashes of Alitalia, and to keep afloat with a cash injection of euro 1 billion.

The leadership of the four unions still has to win over the rank and file, and bring on board the crucial pilot and cabin crew unions. Those two groups on Monday denounced an accord hammered out without them.

“They can’t call it an agreement when the majority of flying personnel is left out,” said Roberto Spinazzola, general secretary of Unione Piloti, according to Bloomberg News.

The agreement also called for the unions to start meeting Monday afternoon to thrash out “a new staff contract for the future company.”

The person with direct knowledge of the negotiations said that the Italian prime minister, Silvio Berlusconi, could intervene in the place of the deputy prime minister, Gianni Letta, later Monday. Berlusconi made finding an Italian solution to salvage Alitalia a central plank of his re-election campaign.

Fantozzi, the Alitalia administrator, will have to judge how much longer the airline can keep flying before he has to start liquidating its assets. The carrier is burning more than euro 1 million a day, but according to some reports it can limp on till the end of September.